State innovation waivers must accommodate vulnerable populations

The federal government has offered more details about how it will evaluate states' alternative proposals to reach the goals of the Affordable Care Act.

A new guidance document from the Department of Health and Human Services and the Department of the Treasury lays out the requirements for state innovation waivers, which allow states to opt out of certain provisions of the ACA as long as they create a viable replacement program.

Such plans are generally required to provide coverage that's at least as comprehensive and affordable as that of the ACA, cover a comparable number of residents and not add to the federal deficit. Yet the new guidance goes further, noting that assessment of whether the proposal covers a comparable number of individuals specifically will take into account its effect on "vulnerable residents," including low-income, elderly and seriously ill individuals.

In addition, "waivers are evaluated not only based on how they affect affordability on average, but also on how they affect the number of individuals with large healthcare spending burdens relative to their incomes," the guidance says. Even if a waiver maintained aggregate affordability, it would be rejected if it reduced affordability for vulnerable groups.

An application also would fail if it reduces the comprehensiveness of coverage provided to vulnerable groups, even if it maintained it in the aggregate.

Further, a state must prove that its waiver will not increase the federal deficit either during the five-year maximum waiver period or during the 10 years covered by a budget plan submitted by the state. The federally facilitated exchange platform also cannot accommodate different rules for different states, the guidance warns, nor is the Internal Revenue Service generally able to administer different sets of rules in different states.

Despite these copious requirements, though, ACA waivers have the potential to expand the concept of health insurance premium assistance. Republican-controlled states such as Georgia have expressed interest in Medicaid expansion waivers in lieu of expansion of the program under the ACA.